Clothing Resale Site ThredUp Raises Another $81 Million

Four years after the clothing resale site ThredUp closed its first round of investment, a process that it then repeated another four times, the start-up has now raised an additional $81 million from Goldman Sachs — a little more than double what The RealReal, a more luxury-focused consignment site, raised last April.

Some of that funding will go toward building new distribution centers to speed up the rate at which ThredUp can process the used clothing that sellers send in, calculate how much money they should get back on it and then put the items up for sale on the site. The start-up already has two warehouses on the east and west coasts, co-founder and CEO James Reinhart said in a phone interview this week, with plans to open another outside of Chicago later this year. Another chunk of the cash will be invested in technology like image recognition, which expedites the process of tagging the products' various attributes. Reinhart says that while the company's software often identifies a clothing item's various qualities correctly, telling apart more organically shaped prints like florals and paisleys is still difficult.

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Cracking image recognition is an interesting challenge, and one that a number of fashion tech start-ups, like ASAP54 and Snap Fashion, have been chasing to varying degrees of success. But another hurdle that's facing ThredUp specifically is a marketing one: How to give its brand, chiefly popular among mothers, the sizzle it needs to reach women at large. The service would be of use to anyone — buying is similar to any other e-commerce experience, and selling involves dumping unwanted clothing into a pre-addressed bag, putting that wherever you drop your mail and getting cash for sellable items. But the site is marketed at families in the same way that Old Navy is, with back-to-school and kids sections front and center.

"What we have to do is figure out how to make it cool," Reinhart says.

While changes to ThredUp's branding aren't imminent, finding its sizzle could have to do with more fashion-forward page design and marketing, Reinhart says. If someone doesn't have a kid, the thank-you email they receive after buying or selling shouldn't feature a woman with a baby, for example. And it's entirely possible to maintain a robust children's business while keeping the adult fare accessible to non-parents. Just look at Crewcuts.